February 12, 2009, 1:42 pm
Charter To File Chapter 11; Stock To Be Worthless Posted by Eric Savitz
Charter Communications (CHTR) will file for protection from creditors under Chapter 11 of the federal bankruptcy code by April 1 as part of a debt restructuring plan, the cable company announced. Under terms of the deal, current Charter common shares will be worthless.
Charter said it reached an agreement in principle with a committee of certain of its debt holders that will reduce its debt by about $8 billion. Under terms of the deal, two of the company’s units will make interest payments totalling $74 million on certain senior notes that were due on January 15. Charter said funding for the restructuring will come from cash on hand, an exchange of debt for new notes, and proceeds of an equity offering for which it has received a “back-stop commitment” from certain noteholders. Various classifications of Charter debt will receive some combination of new notes, common stock and warrants: Common stock holders “will not receive any amounts on account of their common stock, which will be canceled.”
The company said Paul Allen will remain an investor in the company, with the largest voting stake.
Trader creditors are expected to be paid in full, the company said.
Meanwhile, the company also posted preliminary Q4 results. Charter expects pro forma revenue of $1.65 billion, up 7% from a year earlier. Pro forma EBITDA is expected to be $619 million, up 10.1% from a year ago.
Charter said it added 45,300 “revenue generating units” in the quarter. Basic video customers fell a net 75,100. Digital video customers increased a net 22,300. Broadband Internet customers increased a net 22,900. Telephone customers increased a net 75,200.
Charter shares are down 3.25 cents, or 45.5%, to 3.9 cents. That’s precisely 3.9 more cents than the shares are now worth.
http://blogs.barrons.com/techtraderdaily/2009/02/12/charter-to-file-chapter-11-stock-to-be-worthless/
Charter To File Chapter 11; Stock To Be Worthless
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